Communal Infrastructure Investment Needs in Slovenia: An Empirical Survey

By Mrak, Mojmir | East European Quarterly, Fall 2000 | Go to article overview

Communal Infrastructure Investment Needs in Slovenia: An Empirical Survey


Mrak, Mojmir, East European Quarterly


I. INTRODUCTION

Investment in communal infrastructure has not attracted much analytical interest in Slovenia over the last few years. However, there are at least four important reasons that call for a more systematic analysis of the subject.

1. Large investment need& In the second half of 1997, an empirical study was conducted on the gap between Slovenia's overall infrastructure investment needs and the resources available for this purpose (Mrak, 1997, p. 29 and FlAg, 1997, p. 12-13). One of the study's main conclusions is that infrastructure investment needs in Slovenia amount to 8.7 percent of GDP for the 1997-2000 period. Of this total, investment needs equivalent to 1.8 percent of GDP were identified in the area of communal infrastructure covering investment in water supply, sewerage and wastewater treatment and solid waste management. One of the recognised weaknesses of the 1997 study is the relatively poor quality of data forecasting communal investment in the period 1997-2000.

2. Strong dependence of communal infrastructure financing on budgetary resources. In recent years, Slovenia has been financing its communal infrastructure needs by relying heavily on transfers from the state budget. Given the tightness of the state budget at the present time, it is estimated that any substantial increase of infrastructure financing from these sources is not realistic in the near future.

3. Private sector participation. Budgetary and financial considerations, while very important, are not the only issues justifying increased private sector participation in both the provision of infrastructure services as well as in the financing of infrastructure investments. Even more significant is the urgent need to provide the Slovenian economy and society in general with reliable and high quality infrastructure services. There is already a considerable general consensus in Slovenia concerning the need for the private sector's stronger involvement in the economic infrastructure sector. However, for the time being, there is still no strategy for how to transform this general consensus into practice.

4. Adjustment to the EU's requirements. Given that communal infrastructure is strongly underfinanced--this is a common pattern in other transition economies as well (see, for example, EBRD, 1996 and World Bank, 1994)--it is becoming not only a growing obstacle for the country's economic development and the general well-being of its population, but also a bottleneck in Slovenia's expeditious accession to the EU. Harmonisation of the Slovenian legislation to the EU environmental directives and their actual implementation namely requires from the country large investments in the areas of water supply, waste water collection and treatment and solid waste management (see PHARE, 1998 and also ECE/UN, 1997).

The main objective of this article is to provide an empirical survey of communal infrastructure investment in Slovenia. The survey is based on a questionnaire sent to a representative sample of local communities in the country. Another objective is to suggest policy measures aimed at increasing the volume of communal infrastructure investment in Slovenia. These policy measures are also expected to contribute towards an efficient approximation of Slovenia to the EU environmental requirements.

In addition to this Introduction and Conclusions, the paper consists of four main sections. In the first one, methodology of the survey is presented. The second and third sections discuss communal infrastructure investment as presented by the sample of local communities. The analysis starts with an overview of the 1995-1997 communal investment patterns and continues with a survey of communal infrastructure investment plans for the 1998-2002 period. The fourth section is aimed at providing a quantification of the 1998-2002 financing gap between communal infrastructure "investment needs" and financing available for this purpose as foreseen in macro-economic projections. …

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